Budget impasse: Analysts suggest FF Plus has little concern over VAT hike

JOHANNESBURG - As the African National Congress (ANC) continues negotiations to resolve the ongoing budget impasse, some political analysts suggest the Freedom Front (FF) Plus has little concern over the 0.5 percentage point value-added tax (VAT) increase.

The analysts believe the party’s meeting with the ANC is likely to be overshadowed by discussions around the contentious Expropriation Act.

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ANC leaders are continuing with negotiations, with the FF Plus scheduled to meet the party on Sunday.

The FF Plus is one of two parties within the Government of National Unity (GNU) that opposed the fiscal framework in Parliament, citing objections to the VAT increase.

The FF Plus believes that instead of proposing a VAT increase, Minister of Finance Enoch Godongwana’s budget should have focused on offering tax relief measures.

According to the party, there are alternative ways to address the budget deficit without raising VAT, and it plans to present these suggestions to the ANC during the talks.

However, political analyst Goodenough Mashego said the FF Plus’s voter base won’t be significantly impacted by the VAT hike but is more concerned about the Expropriation Act.

“What they want to negotiate is assurance that the Expropriation Act, as it is right now, is not an act that will give government the power to willy-nilly take land from people. All they need is that assurance.”

Another analyst Professor Bheki Mngomezulu said despite this, the ANC may have to meet the FF Plus halfway.

“As much as the Freedom Front Plus has fewer seats compared to the DA [Democratic Alliance], it is also important in the government because for the ANC to proceed, they do need the Freedom Front Plus. Whether they like it or not.”

The ANC said talks on the budget impasse will be concluded before the end of this week.